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Ultimately, I’m looking for a bounce that I can start shorting again.
The DAX has fallen significantly during the trading session on Thursday as we have seen stocks around the world struggle. The €12,400 level continues to offer support, as we have seen it do so a couple of times now. We have also bounced a bit during the trading session, as the absolute freaking out during the trading session gave up once we got close to the US afternoon, and perhaps we are ready to see a little bit of a relief rally. That being said, it is still very much countertrend, and it’s likely that this market will continue to break down.
If we were to break down below the €12,400 level, then it’s likely that we go down to the €12,000 level. We have been in a downtrend for a while, and even if we do get a nice rally from here, that rally is probably short-term, to say the least, because the German economy is essentially a basket case at this point, and it’s likely that we will continue to see a lot of selling pressure due to the fact that the rest of the world is slowing down, and the DAX is full of major exporters. Furthermore, the Germans are having trouble providing their own energy, and therefore it’s likely that we continue to see a lot of selling pressure over the longer term. At this point, the €13,000 level seems to be a major resistance barrier for short-term traders.
Even if we do break above the €13,000 level, it’s likely that we would see the 50 Day EMA offer a lot of dynamic resistance near the €13,400 level. The market continues to see plenty of reasons to fall, but we will get the occasional pullback like you would in any other trend. The DAX will do better than most of the other European indices on the whole because it is the first place that people will put money back into when they feel it is safe. A lot of this will come down to the European Central Bank and what they are going to do. At this point, they suggest that they are going to do a few minor rate hikes, but the question is whether or not they can do much of that? Ultimately, I’m looking for a bounce that I can start shorting again. Ready to trade our DAX prediction? Here’s a list of some of the best CFD trading brokers to check out.
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